Home care, prevention’s down side: Less revenue for nursing homes, hospitals

December 8, 2012

SARANAC LAKE - Adirondack Health is laying off 17 employees as part of a long-term restructuring plan announced Friday.

Chandler Ralph, president and CEO of the nonprofit conglomerate of hospitals, nursing homes and clinics, told the Enterprise that the restructuring will help close a $3 million budget gap the organization faces in 2013.

In addition to eliminating 17 full-time jobs, the hospital is not filling another eight vacant positions, freezing management salaries for 2013, outsourcing its medical transcription services, reducing its pharmaceutical purchases by $1.5 million and asking its employee unions to reopen their contracts and make some concessions.

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Chandler Ralph(Enterprise file photo)

Ralph blamed the restructuring on a "seismic shift" in health care toward more home-based care, the effort to reduce patient readmissions and a growing demand for outpatient services. That's led to a 10 to 20 percent decline in in-patient volume at the Adirondack Medical Center hospital in Saranac Lake over the last two to three years, Ralph said.

"It's all good, the direction we're going in, keeping people at home and not being readmitted to the hospital, but that has a definite effect on the volume going forward, and whenever you reduce volume, you have to reduce staff accordingly," Ralph said. "Every business does that.

"What I feel when I walk through the hospital is, there's a lot of empty beds. Are people being healthier? Have we done a better job discharging patients? Have the primary-care physicians done a good job in trying to catch things early through the Medical Home project? Yes. But over the past five months there's been 133 layoffs at North Country hospitals, and we're next."

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Declining reimbursements from state and federal sources are the other big reason for the restructuring, Ralph said.

Adirondack Health employed 900 people before the layoffs, making it the Tri-Lakes area's biggest private employer by far. Ralph said the employees who are losing their jobs aren't from any particular facility or area.

"It's across the board: food service, nursing, management," Ralph said. "We took a real careful look at the volume in all areas of services that we offer and said, 'Do we still need that number of people to deliver the services we're delivering.' It was not an easy decision and obviously a very painful one."

The affected employees were notified Friday morning in meetings with their department heads and human resources staff. They were directed to the Employee Assistance Program in Plattsburgh and given listings of job openings at Adirondack Health, local physicians' offices and surrounding hospitals. Some of the employees will get severance pay.

Several of those who are being laid off will have "bumping rights," per their union contracts, that allow more senior employees whose jobs are being eliminated to "bump" less senior employees, who would then lose their jobs.

Ralph said the layoffs won't affect patient care. She said it's only the second time during her tenure, which dates to 1995, that the hospital has had to lay off a large number of employees. The last time was roughly a dozen years ago, when about seven or eight staff were let go, she said.

Asked about the timing of Friday's job cuts being so close to the holidays, Ralph said the hospital recently finished its budget process and had to take action.

"I think it's tough before Christmas, but on the other hand, you don't want people to go out and spend, thinking they have a job, and then do it after Christmas. There's no good time for this at all, but our budget relies on the fact that we have fewer positions, and we had to do what we had to do."

Among some of the other restructuring measures, Adirondack Health is freezing salaries for all management and leadership staff, including Ralph, next year. That represents about 4.4 percent of the hospital's work force.

The hospital will also be enrolling in the 340-B federal drug pricing program, which allows it to buy pharmaceuticals at a discounted rate. This is the first year the hospital qualified for the program. The move will save $1.5 million.

The switch to an outside transcription service, Mediscribes Inc., will save another $250,000. Currently, the hospital employs eight people to do that work, most of whom work from home. Ralph said the new company has hired all but one of those eight people.

Ralph said Adirondack Health will also ask its employee unions, the New York State Nurses Association and the United Food and Commercial Workers, to reopen their contracts. Specifically, the hospital hopes to negotiate bigger employee health insurance contributions.

Even with this restructuring, Ralph warned that Adirondack Health may not be out of the woods yet. She said there are two rural hospital Medicare regulations that are set to expire at the end of the year. If they're not renewed, the organization would face another $2 million cut.

"We will have to do something else if that cut comes through," she said. "We'd have to take a look at programs we're delivering to the community. Can we continue to support these programs? We love having centers in these three different communities because that is the area we live in, but how long can people support that?"

Although the hospital is cutting back on its staff, that hasn't meant Adirondack Health isn't investing in new facilities. Earlier this year, it opened a new, $2.7 million Wound and Hyberbaric Treatment Center. In June, the organization announced plans to move its Lake Placid hospital to the Uihlein Living Center campus, where it plans to build assisted living, senior housing and a new medical fitness center.

"You have to grow to survive," Ralph said. "One of the things we looked at is wound care. With the increase in diabetes, this is a growth area across the country. That's why we built the wound care center, and soon we're going to open a primary care center on the second floor.

"At Uihlein, we're decreasing (from 120) to 60 (long-term nursing home) beds over a year-and-a-half period. We're going to gain efficiencies so we're not running two buildings. That efficiency will save money, and assisted living is desperately needed in the Tri-Lakes area."

Adirondack Health is one of several health care organizations across the North Country to announce restructuring plans that have included staff cutbacks in recent months, many of them tied to declining reimbursement rates.

Just this week, Claxton Hepburn Medical Center in Ogdensburg announced it was laying off six employees, had eliminated a total of nine positions and had realigned the duties of 13 more staff. The hospital also laid off eight workers in July.